HeritageCrystal Clean Inc. (HCCI, Financial) filed Quarterly Report for the period ended 2009-03-28.
HERITAGE-CRYSTAL CLEAN LLC headquartered in Elgin Illinois is a privately-held marketing and sales Company that concentrates on servicing the automotive repair commercial and industrial marketplaces primarily in the Midwest and Eastern States. HeritageCrystal Clean Inc. has a market cap of $104.2 million; its shares were traded at around $9.75 with and P/S ratio of 1.
For the first fiscal quarter of 2009, total cost of sales increased $1.2 million, or 19.1%, to $7.5 million from $6.3 million for the first fiscal quarter of 2008. We recorded costs of approximately $0.9 million during the first fiscal quarter of 2009 that related to declining crude oil prices. These increased costs reflect additional revaluation of our solvent held at our locations for use in our service programs which must be valued at the lower of cost or market.
For the first fiscal quarter of 2009, operating costs increased $0.7 million, or 6.1%, to $12.2 million from $11.5 million for the first fiscal quarter of 2008. Operating costs, including branch labor and collection truck costs, increased as a percentage of sales as additional branches were established. Diesel fuel and transportation costs decreased both in total as well as a percent of sales as energy prices decreased in the first fiscal quarter of 2009 compared to the first fiscal quarter of 2008.
For the first fiscal quarter of 2009, selling, general and administrative expenses decreased $2.7 million, or 40.1%, to $3.9 million from $6.6 million for the first fiscal quarter of 2008. The decline was due to $3.2 million of expense for employee stock options which were granted at the time of our initial public offering and vested immediately along with the vesting of certain Key Employee Membership Interest Trust “KEMIT” units in the first fiscal quarter of 2008.
As of March 28, 2009 and January 3, 2009, cash and cash equivalents were $2.2 million and $0.3 million, respectively. Our primary sources of liquidity are cash flows from operations and funds available to borrow under our bank credit facility.
Our secured bank credit facility provides for borrowings of up to $25.0 million. On March 3, 2008, we amended the credit facility to extend the maturity date of the credit facility to December 31, 2010. Under the terms of the credit facility, interest is payable monthly at the prime rate, unless the total leverage ratio is greater than or equal to 2.75 to 1. The weighted average effective interest rate for amounts outstanding was 3.25% and 6.58% at March 28, 2009 and January 3, 2009, respectively. Amounts borrowed under the credit facility are secured by a security interest in substantially all of our tangible and intangible assets. As of March 28, 2009, we were in compliance with all covenants under the credit facility. As of March 28, 2009 and January 3, 2009, $25.0 million and approximately $24.9 million were available for borrowing under the bank credit facility, respectively.
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HERITAGE-CRYSTAL CLEAN LLC headquartered in Elgin Illinois is a privately-held marketing and sales Company that concentrates on servicing the automotive repair commercial and industrial marketplaces primarily in the Midwest and Eastern States. HeritageCrystal Clean Inc. has a market cap of $104.2 million; its shares were traded at around $9.75 with and P/S ratio of 1.
Highlight of Business Operations:
For the first fiscal quarter of 2009, sales increased $0.8 million, or 3.5%, to $23.8 million from $23.0 million for the first fiscal quarter of 2008. This is less than the sales growth we reported in prior quarters, and reflects the impact on our business of the start of the recession. We have yet to see a clear sign of recovery or bottoming of this revenue trend and it is possible that in future quarters of 2009, we could report modest revenue declines versus year-ago quarters.For the first fiscal quarter of 2009, total cost of sales increased $1.2 million, or 19.1%, to $7.5 million from $6.3 million for the first fiscal quarter of 2008. We recorded costs of approximately $0.9 million during the first fiscal quarter of 2009 that related to declining crude oil prices. These increased costs reflect additional revaluation of our solvent held at our locations for use in our service programs which must be valued at the lower of cost or market.
For the first fiscal quarter of 2009, operating costs increased $0.7 million, or 6.1%, to $12.2 million from $11.5 million for the first fiscal quarter of 2008. Operating costs, including branch labor and collection truck costs, increased as a percentage of sales as additional branches were established. Diesel fuel and transportation costs decreased both in total as well as a percent of sales as energy prices decreased in the first fiscal quarter of 2009 compared to the first fiscal quarter of 2008.
For the first fiscal quarter of 2009, selling, general and administrative expenses decreased $2.7 million, or 40.1%, to $3.9 million from $6.6 million for the first fiscal quarter of 2008. The decline was due to $3.2 million of expense for employee stock options which were granted at the time of our initial public offering and vested immediately along with the vesting of certain Key Employee Membership Interest Trust “KEMIT” units in the first fiscal quarter of 2008.
As of March 28, 2009 and January 3, 2009, cash and cash equivalents were $2.2 million and $0.3 million, respectively. Our primary sources of liquidity are cash flows from operations and funds available to borrow under our bank credit facility.
Our secured bank credit facility provides for borrowings of up to $25.0 million. On March 3, 2008, we amended the credit facility to extend the maturity date of the credit facility to December 31, 2010. Under the terms of the credit facility, interest is payable monthly at the prime rate, unless the total leverage ratio is greater than or equal to 2.75 to 1. The weighted average effective interest rate for amounts outstanding was 3.25% and 6.58% at March 28, 2009 and January 3, 2009, respectively. Amounts borrowed under the credit facility are secured by a security interest in substantially all of our tangible and intangible assets. As of March 28, 2009, we were in compliance with all covenants under the credit facility. As of March 28, 2009 and January 3, 2009, $25.0 million and approximately $24.9 million were available for borrowing under the bank credit facility, respectively.
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